July 15, 2011

Russia’s Sberbank Introduces a Lie-Detector ATM to Fight Fraud

Analyst Insight by Michelle Evans.

Russian's biggest bank is testing a machine reminiscent of one that might have been used during the old KGB days. Sberbank, which will begin using the innovative ATM machine complete with a built-in lie detector, was prompted to make the move following the global financial crisis and the number of people who could not or would not repay loans.

Consumers with no previous relationships with the bank will be able to talk to the machine in order to apply for a credit card or bank loan in lieu of human interaction at a bank branch. The machine is equipped to scan a passport, record fingerprints and take a three-dimensional scan for facial recognition.

It's also able to use voice-analysis software to help assess whether the person is truthfully answering certain questions like “Are you employed?” or “Do you have any other outstanding loans?” for example. If the stress level of the voice passes a certain threshold then it is likely that person would be rejected.

The new machines are the first of its kind in the world able to battle fraud by relying on a wide variety of high-tech tools. The system was developed by the Speech Technology Center, whose clients include the Russian domestic intelligence agency, a descendant of the Soviet KGB.

The new system, which would detect nervousness and emotional distress, was designed in part by sampling Russian law enforcement databases to study the voices of people found to have been lying to police during interrogations.

Sberbank, which plans to introduce the ATM into bank branches and malls across the country, will use this information along with the person's credit history in order to make a decision about the consumer's credit worthiness.

The ATM machine is a critical component of the payment transaction lifecycle in Eastern Europe. The region remains a deep-rooted cash culture with 88% of all its payment volume traced back to cash transactions and cash is expected to remain the most popular type of consumer payment across Eastern Europe until at least 2015, according to figures by Euromonitor International.

Of all the regions in the world, Eastern Europe exhibited the greatest dependence on the ATM as the ATM transaction value accounted for roughly 80% of the total card transaction activity. In both Russia and Romania, it is common for workers to immediately withdraw their paychecks from their salary cards because they fear using cards for transactions involving large sums of money.

In the end, the machine will require too many steps for something as simple as a cash withdrawal, though it could be beneficial in performing other bank transactions like accessing loan applications while also combating rising fraud.